Both Sides of the Table

SEPTEMBER 29, 2013

It’s hard to be a great lead investor . VCs take their time precisely for the reason Fred articulates – they play the role of “lead investor.” lack of traction, lack of downstream financing availability. They will have to help get the next round done. Essentially they will have to work. .

Syndication 356

Syndication Syndicate Cofounder Early Stage 356

Gust

DECEMBER 27, 2012

While yCombinator and TechStars are the two best known, there dozens of others, local, national and international, many specializing in specific areas (including fashion, food, finance, gaming, etc.) Your goal in all this is to try to find a lead investor. He or she will be your primary champion, and often mentor.

Software Review 164

Software Review Term Sheet Technical Review Angel Investor 164

View from Seed

JANUARY 27, 2021

100M is a meaningful increase from our $50M third fund, though it’s still quite small in the grand scheme of venture, especially amid the recent wave of late stage financings and SPACs. This is a fresh $100M fund with the same high-conviction, hands-on seed strategy that we’ve been pursuing since the start of NextView over 10 years ago.

LP 411

LP Early Stage Seed Stage Venture Capital 411

The Startup Magazine

MARCH 1, 2021

It became clear to us that while funding bodies are committed to supporting positive interventions and are ready to provide financing, they are discouraged by previous projects that cost too much and took too long. She’s also our lead investor interface, and great at articulating our vision to investors and partners alike.

Technical Review 110

Technical Review Founder Saudi Arabia Cofounder 110

ithacaVC

MARCH 9, 2017

Sometimes at the seed stage, the company founder insists that he/she be the only board member and that once more financing is raised that the board composition will be normalized (code word for “adding more members”). We followed in line with the lead investor and went along with the structure.

Seed Stage 58

Seed Stage Software Review Institutional Investors Lead Investor 58

ReadWriteStart

FEBRUARY 19, 2020

Colombia has a few industries with massive potential for disruptive transformation , in particular, health and finance. Though still in early funding stages, Truora left Y-Combinator with regional investors Magma Partners and Kaszek Ventures, and foreign investors Y-Combinator and Accel. Industry gaps. Ayenda Rooms.

Colombia 146

Colombia America Technical Review Startup 146

View from Seed

FEBRUARY 26, 2020

In previous blog posts I’ve written about the two main approaches to building a seed round syndicate – the subscription method (where an entrepreneur presets a structure with a convertible note or SAFE and recruits investors who subscribe to the round, all without a term-driving lead investor) and a term-driving lead investor approach.

Syndication 257

Syndication Syndicate Lead Investor Venture Capital 257

View from Seed

SEPTEMBER 23, 2019

To provide relevant perspective, listing past convertible note(s) and/or equity financing(s) including total round size and valuation (caps) is helpful. Also, sharing some flavor (but not necessarily full detailed specifics) of the existing investor-set adds context.

Cap Table 211

Cap Table Seed Stage Valuation Dilution 211

View from Seed

FEBRUARY 23, 2021

The average investor is fairly harmless, and even if they aren’t as helpful as one would hope, they rarely create major headaches. What you sometimes lose is the strength of the syndicate to support the company in the future if intermediate financing is needed.

Syndication 207

Syndication Syndicate Term Sheet Cofounder 207

Gust

OCTOBER 26, 2011

As we conclude our convertible note financing series, there are assorted terms commonly seen in term sheets and deal documents that are worth touching on briefly. The Note Purchase Agreement and Convertible Promissory Note are essential documents for any convertible note financing.

Finance 79

Finance Term Sheet Covenant Accredited Investor 79

Gust

SEPTEMBER 27, 2014

To begin with, it is important to understand some basic facts about the world of entrepreneurial finance: There are many more entrepreneurs than there are investors, with the result that only one company out of every 400 that seeks venture funding actually receives it.

Angel Groups 159

Angel Groups Elevator Pitch Software Review Deal Flow 159

This is going to be BIG.

MAY 4, 2022

I’m a straight white dude who grew up in NYC and worked in finance. How competitive is your company going to be in the race to recruit the best women on the market (women—the segment of the talent market who hold the majority of new college degrees) when your lead investor is a top donor to an anti-choice org?

Cap Table 167

Cap Table Cofounder Private Equity Finance 167

The Next Web

OCTOBER 7, 2013

As stated earlier, investors will dilute ownership upon nearly every round of financing. You might assume the lead investor wants a 20 percent stake and 15 percent option pool each time there’s a Series ‘Blah’ every 12 to 18 months, but this is admittedly too simple.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Both Sides of the Table

DECEMBER 18, 2009

But then I got a call from my lead investor (coincidentally it was GRP Partners where I now am a partner) and they told me not to lose confidence. We got their commitment and our existing investors bridged us until the new financing round could close. We spent a couple of hours (and drank a couple of pints).

Germany 298

Germany Entrepreneur Merger Los Angeles 298

Hunter Walker

SEPTEMBER 12, 2022

And while I passed on leading their seed, I did contribute a smaller amount into the financing, along with three subsequent pro rata/super pro rata investments.

Cofounder 99

Cofounder Lead Investor Founder Restful 99

View from Seed

FEBRUARY 12, 2020

This question helps an investor assess a deal’s level of competitiveness as well as the likelihood that it falls into a zone that the investor would consider reasonable. The tricky part of this discussion is that existing investors often aren’t that crisp about what they want to do in the new round.

Term Sheet 364

Term Sheet Burn Rate Founder Partner 364

David Teten

SEPTEMBER 5, 2014

Like many established finance & media companies, GLG knows that the tech startup sector is a growing part of the economy. Over the past 15 years we’ve built this amazing membership to serve our core clients – leading investors, corporations, consulting firms, and nonprofits. Or, you can go straight to the source.

New York 114

New York Technical Review Networking Advisory Board 114

David Teten

JANUARY 10, 2012

He is an active angel with many successful angel investments including: Rent.com, (purchased by Ebay in 2005 for $415 million), Golfnow.com (purchased by Comcast in June 2008), and Lifelock (lead investors include Bessemer Venture Partners and Kleiner Perkins Caufield & Byers). and Tweetdeck (purchased by Twitter in June 2011).

Technical Review 128

Technical Review Technology North Carolina Switzerland 128

reidhoffman.org

NOVEMBER 12, 2013

You may happen to emphasize the right points that pique an investor’s interest, but you shouldn’t leave your financing up to chance. Second, understand the broader financing climate. In 2004, investors regained interest in the consumer internet again. Steer into your investors’ objections.

Entrepreneur 111

Entrepreneur Viral Revenue Networking 111

Pascal's View

JULY 9, 2017

At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. When it comes time to convert the notes, these entrepreneurs face ‘sticker shock’ about their post-financing ownership.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

OnlyOnce

JULY 26, 2018

Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table. On the other side, what’s an example of a “good” loss?

Cap Table 61

Cap Table Lead Investor Valuation Reputation 61

Version One Ventures

JANUARY 28, 2013

Seed financing grew from 89 fundings in Q1 2009 to more than 500 in Q3 2012. That means there are a lot more seeded startups out there: an excess demand for a limited supply of Series A financings. Do your homework on potential investors. As an example, Version One has more than 50% of its funds reserved for follow-on financing.

Burn Rate 140

Burn Rate San Francisco Vesting Finance 140

The Equity Kicker

DECEMBER 3, 2012

Chris Dixon wrote an interesting post yesterday which described two different ways of thinking about startup opportunities – the finance lens and the product lens. whilst investors typically look at opportunities from an investment perspective, asking the question ‘is there an opportunity to make a lot of money from this investment?’.

Finance 116

Finance Valuation Lead Investor Startup 116

This is going to be BIG.

FEBRUARY 27, 2011

You get dilution sensitive and you start optimizing on price of a financing deal, versus finding the right partners or raising enough money to grow. The right lead investor and the right amount of cushion in a raise can help with the best defense against scaling disaster—hiring.

Dilution 104

Dilution Equity Hiring Partner 104

Genuine VC

JULY 30, 2012

By communicating pricing expectations with potential lead investors, I mean sharing either an “ask” or even stated floor for the pre-money valuation of the company (with a priced preferred round) or explicitly stating a valuation cap (for convertible note round).

Valuation 136

Valuation Pre-Money Valuation Angel Investor Syndication 136

Scott Edward Walker

JUNE 9, 2019

Over the past few weeks, two of my clients have received financing term sheets in which the investors requested super pro rata rights. Simply put, pro rata rights permit the investor to maintain its percentage ownership in subsequent financing rounds. Introduction. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Hunter Walker

JANUARY 19, 2023

Can any transition to a venture-financed for profit be truly Open? But is throwing money (and frankly the importance of their brand, which right now is red hot) into startups a lead investor really Open? The company you keep does impact behaviors, no? Is this a new model or just a new FAANG?

Naming 64

Naming Lead Investor Distribution Technology 64

SiliconHills

JANUARY 31, 2017

ATX Seed Ventures announced it is the lead investor in GoCo’s $2.5 million financing round. Other investors included Guardian Life Insurance and Salesforce Ventures. GoCo.io, based in Houston, is a software startup that provides an all-in-one Human Resources platform focusing on small to medium sized companies.

Houston 48

Houston Lead Investor Finance Software 48

OnlyOnce

JULY 26, 2018

Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table. On the other side, what’s an example of a “good” loss?

Cap Table 48

Cap Table Lead Investor Valuation Reputation 48

View from Seed

OCTOBER 21, 2014

Sharing these pricing expectations early with potential lead investors fundamentally qualifies your conversations, but it also runs the risk of prematurely losing a potential financing partner, or else it can reduce options to maximize your fundraise outcome.

Valuation 336

Valuation Founder Seed Stage Angel Investor 336

Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. So you can see why this leads to a lot of tension and misunderstanding. It’s very simple.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

View from Seed

JANUARY 26, 2016

There are a number of factors that have contributed to the rise of pre-seed rounds, but the strongest have been the frothy late-stage financing market, coupled with both the scaling-up of some of the early winners in the institutional seed ecosystem and the scaling-down of some larger funds that retrenched after the financial crisis.

Seed Stage 120

Seed Stage Early Stage Cofounder Finance 120

Hunter Walker

JANUARY 10, 2022

Homebrew was on the board of a construction tech startup called BuildingConnected , having led their seed financing. The needs of the lead investor for ownership? A round that is most accommodating for the existing investors while allowing you to get new people involved? You want to tell people how we originally met?

Cofounder 93

Cofounder Founder Acquisition Startup 93

The Startup Magazine

AUGUST 18, 2017

The opening keynote session will define directions on Aligning the Role of Government Policymakers, Incumbent Banks, FinTech Innovators, Investors, Multilateral Agencies, MNOs and the Private Sector to Create a Dynamic Ecosystem for FinTech in Africa.

Africa 62

Africa Ethiopia Elevator Pitch Technical Review 62

Steve Blank

FEBRUARY 3, 2011

We were just about to have a board meeting in another week to talk about raising another round of financing to keep our struggling disaster afloat. Steve, we thought we’d tell you this before the board meeting, but both our firms are going to pass on leading your next round.” Our board meetings were collegial and often fun.

San Francisco 333

San Francisco Silicon Valley Limited Partner Venture Capital 333

mashable.com

NOVEMBER 2, 2011

Look for Your Lead Investor. First you’ll want to find a lead investor — someone many other investors will recognize and respect. This list of top angel investors is a good start. Money and Finance Lists. I use a service like Tout to manage my email templates for quickly replies. Holiday Lists.

Social Media 80

Social Media Startup Angel Investor RSS 80

Genuine VC

JULY 10, 2012

There are essentially two distinct basic strategies for startup entrepreneurs to raise a seed round of capital: Subscription approach – An entrepreneur sets a structure (usually a convertible note) and recruits individual angel investors who subscribe to the round, all without a term-driving lead investor.

Syndication 207

Syndication Syndicate Seed Stage Portfolio 207